No. 12932 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

SEYMOUR L. STORCH, 

Plaintiff and Appellant, 

BOARD OF DIRECTORS OF THE 

EASTERN MONTANA REGION FIVE 

MENTAL HEALTH CENTER, et a 1. , 

Defendants and Respondent. 

Appeal from: District Court of the Sixteenth Judicial District, 

A. B. Martin, Judge presiding. 

Counsel of Record: 

For Appellant: 

Robert L. Stephens, Jr. argued, Billings, Montana 

For Respondent : 

Lucas, Jardine & Monaghan, Miles City, Montana 

James P. Lucas argued, Miles City, Montana 

Habedank, Cumming & Best, Sidney, Montana 

Jacque W. Best argued, Sidney, Montana 

- - 

Submitted: December 11, 1975 

Decided : JArj 2 1 7976 

Filed: T;c;,iA; "1 

. ', 
14r. Justice Gene B. Daly delivered the Opinion of the Court. 

Plaintiff Seymour L. Storch brings this appeal from 

a judgment of the district court, Custer County, the Hon. A.B. 

Martin presiding, dismissing plaintiff's complaint for failure 

to state a claim upon which relief may be granted. 

The individually named defendants in this action are 

members of the Board of Directors of the Eastern Montana Regional 

Mental Health Center, Region 5. On December 4, 1972, plaintiff 

Storch was employed on a probationary basis by the tfental Health 

Center as a drug abuse consultant. During plaintiff's probationary 

period, board member Ethel Eond made a written recommendation to 

Rod L. Newman, Program Director for the Center, that torch's 

employment be terminated. Upon review of this recommendation and 

other complaints received, the Eoard of Directors sought the 

termination of torch's employment with the Center for these reasons : 

"I. His physical appearance and body cleanliness 

are not acceptable for a professional person in our 

community. 

"2. While we recognize that his personal life is 

a private matter, the Board feels we cannot condone 

the open illicit cohabitation. This does not set a 

good example for people with problems or our young 

people. 

"3. The medical community has been consulted. The 

response by the doctors except one has been they 

would not refer patients to this man and feel the 

Center has deteriora-ted since the addition of this 

man to the staff. 

"4. His behavior and actions reflect upon the Center 

adversely. We realize that there are some people who 

have benefited from his service. But for the good of 

the Center and the continued support from the communities, we have asked for f4r, torch's resignation. f 1 

On May 16, 1973, Rod L. Newman, Program Director, asked 

Storch for his resignation. Upon torch's request for an explanation, Newman sent him a letter listing the reasons cited by the 

Center's Board of Directors and advising Storch that a.s a probationary employee, he had no right to appeal or hearing. When 
Storch refused to resign, his employment was terminated, effective 

June 15, 1973. 

With the termination of his employment, Storch, through 

legal counsel, filed a complaint in Custer County district court 

seeking special damages of $250,000, punitive damages of $50,000, 

and $50,000 for injury to plaintiff's reputation. The three 

counts of the complaint went basically to the contention that the 

reasons given by the Board in the letter requesting plaintiff's 

resignation were libelous reflections on his professional ability 

and improper invasions of his constitutional right to privacy. 

In answer to plaintiff's complaint, defendants filed a 

motion to dismiss for failure to state a claim upon which relief 

may be granted. The motion to dismiss stated two basic reasons: 

1. That the acts complained of were discharged by an agency 

of state government as a governmental function and were therefore 

subject to the defense of sovereign immunity. 

2. That the acts complained of were within the proper 

discharge of an official duty and were therefore subject to the 

defense of absolute privilege. 

The complaint being dismissed with prejudice the district court's judgment operated as a final determination upon the 

merits and was therefore res judicata for purposes of plaintiff's 

cause. Thereafter, plaintiff appealed to this Court. 

The sole issue before this Court is whether the district 

court erred in granting defendants' motion to dismiss. 

Plaintiff contends that section 83-701, R.C.I.I. 1947, 

the specific statutory provision then in effect, waived any sovereign 

immunity (1889 Constitution in effect at time cause of action 

accrued) to the extent that the state or its instrumentalities 

were insured. This contention erroneously presupposes that liability insurance is the only limitation on waiver of statutory 

immunity. 
It is an established general principle that any statutory 

waiver of a state's immunity from suit is to be strictly construed. 

72 Am Jur 2d, States,Etc., $121. This Court recognized the 

continuing validity of this principle in Kish v. Montana State 

Prison, 161 Hont. 297, 301, 505 P.2d 891, when it quoted from 

Kaldahl v. State Highway Commission, 158 ?*font. 219, 221, 490 P.2d 

"'AS to legal actions against the state, the 1959 

legislature passed Chapter 7, Title 83f1 R.C.M. 

1947 - "~ort Actions Against the State , and in 

Even sections, sections 83-701 through 83-707, 

carefully determined how, why, and when the state 

could be sued in a tort action. These legislative 

enactments recognized tort liability and establish 

immunity of the state in excess of a collectible 

insurance. Thus, these statutory provisions provide 

a remedy against the state under-certain circumstances. 

The legislature has spoken and we are bound by its 

1 I1 enactments. (Emphasis supplied. ) 

See also: Valley County v. Thomas, 109 Mont. 345, 97 P.2d 345; 

State ex rel. LaPoint v. District Court, 69 Mont. 29, 220 P. 88. 

The statute, section 83-701, R.C.M. 1947, provided in 

pertinent part: 

"The district courts of the state of Montana shall 

have exclusive jurisdiction to hear, determine, and 

render judgment to the extent of the insurance coverage 

carried by the state of Montana on any claim against 

the state of Montana for money only, accruing on or 

after the passage and approval of this act, on account 

of damage to or loss of property, or on account of 

personal injuries or death caused by the negligence or 

wrongful act or omission of any employee of the state 

of Montana. >'i 9: >'i" 

The statute expressly restricts waiver of tort immunity 

to the common tort actions for recovery of damages for personal 

injury or death or damage to property. Applying the rule of strict 

construction, the plaintiff's two basic claims of libel and invation of privacy do not fit into the tort categories specified in 

the statute. It thus becomes unnecessary to discuss the effect of 

any liability in'surance because the failure of the "certain circunstances" test of Kaldahl constitutes an absolute bar to waiver of 

sovereign immunity. 
Plaintiff also contends that defendants' reliance on 

the privileged communication defense to a libel claim is misplaced because Montana law requires the absence of malice for 

such a defense. In this case, plaintiff claims the alleged libelous 

communication involved malice and therefore the defense could not 

stand. We find no merit in this contention. 

A privileged communication is one which, except for the 

circumstances under which it is made, may be defamatory and 

actionable. Section 64-208, R.C.M. 1947, provides: 

11 What communications are privileged. A privileged 

publication is one made: 

"1. In the proper discharge of a.n official duty; 

"2, In any legislative or judicial proceeding, or 

in any other official proceeding authorized by law; 

"3. In a communication, without malice, to a 

person interested therein, by one who is 

also interested, or by one who stands in 

such relation to the person interested as 

to afford a reasonable ground for supposing 

the motive for the communication innocent, 

or who is requested by the person interested 

to give the information; 

"4. By a fair and true report, without malice of 

a judicial, legislative, or other public official 

proceeding, or of anything said in the course 

thereof. " 

While some of the quoted subsections do mention malice the pertinent subsection 1, says nothing about qualified privilege. 

Rather it constitutes an absolute privilege with the only requirement being that the intradepartment communication be one rendered 

while engaged in an "official duty". There ca.n be no doubt that 

the hiring and firing of employees is part of the "official duty" 

of Montana Regional Health Centers. The title of Chapter 246, Laws 

of 1967, reads: 

"An Act Expanding Duties and Services of the Dit~i.sion 

of Mental Hygiene of the State Board of Public Institutions by Establishing and Conducting Mental Health 

Clinics and Community Comprehensive Mental Health 

Centers; Creating Regional Mental Health Boards; Providing for the Organization Thereof 9~ ik 72. " (Emphasis 

supplied.) 
Thus it becomes obvious the legislative intent was to make the 

mental health center an arm of the state and hiring and firing a 

function of that agency. 

Whether statements made by such public officers in 

relation to the hiring and firing of employees nay be subject to 

absolute privilege has been answered in the affirmative many times. 

Under facts similar to the instant case, the United States Supreme 

Court in Barr v. >$atteo, 360 U.S. 564, 571, 79 S.Ct. 1335, 3 L ed 2d 

1434.,1441, stated that insofar as a public officer was acting 

within the scope of his authority his communication was absolutely 

privileged. See also: Newbury v. Love, 242 F.2d 372; ?.$organ v. 

Willingham, 424 F.2d 200; Preble v. Johnson, 275 F.2d 275. 

The Court went on to say why an absolute privilege was 

essential in such a circumstance, quoting approvingly from Judge 

Learned Hand's decision in Gregoire v: Biddle, 177 F.2d 579, 581: 

1 I 1 ; J; 9: it is impossible to know whether the claim 

is well founded until the case has been tried, and 

that to submit all officials, the innocent as well 

as the guilty, to the burden of a trial and to the 

inevitable danger of its outcome, would dampen the 

ardor of all. but the most resolute, or the most irresponsible, in the unflinching dbscharge of theeir dutiies .* * *"' 

Since the internal communication was it it shin the proper 

discharge of an official duty, it enjoyed an absolute privilege 

and could therefore not be the subject of libel action. 

Finally, the facts stipulate that plaintiff wa.s on 

probationary status. The purpose of such status is to provide a 

brief period in which to measure the employee's ability to perform 

his job before granting him a degree of job security. If the 

appropriate state employer feels that the employee is not measuring 

up during this probationary period it can dismiss that employee 

without procedural due process. M.A.C. 2-3.34 (26)-S34160. 

Plaintiff places heavy reliance on Perry v. Sindermann, 

408 U.S. 593, 597, 92 S.Ct. 2694, 33 L ed 2d 570,577, for his 

claim that the exercise of the right of privacy constitutes substantive due process and as such is controlling on the constitut.ional 
issue in this case, even though his employee status was probationary. In Perry the Court stated: 

"* * * even though a person has no 'rightf to a 

valuable governmental benefit and even though the 

government may deny him the benefit for any 

number of reasons, there are some reasons upon 

which the government may not rely. It may not deny 

a benefit to a person on a basis that infringes his 

constitutionally protected 8, interests * -L. I I 

So the issue becomes whether the dismissal of plaintiff 

infringed upon his substantive due process right of privacy. 

At the outset, it should be remembered that the exercise of constitutional rights is not absolute. In Weber v. Highway Commission 

of State of Montana, 333 F.Supp. 561, 564, Judge Russell E. Smith 

said : 

"* 9: +:His exercise of his [employee's] rights to 

freedom of speech 9: * ;? did not furnish him with 

a 4. form of job insurance. 'k 9~ " 

Ye * that the motive for the firing was generated 

by plaintiff's exercise of his first amendment rights 

does not in my opinion prevent the Highway Department 

from dismissing him if a valid cause for dismissal is 

shown ik Ji J<" 

Thus where an overriding government interest can be shown, the 

employee's exercise of substantive constitutional rights is not 

controlling in the disposition of the case, 

Here, the letter from the Chairman of the Personnel 

Committee to the Director of the Eastern Montana Regional Mental 

Health Board, which forms the core of lai in tiff's complaint, 

gave several reasons for requesting plaintiff's dismissal but the 

main ingredient was the belief by the Board of Directors that the 

plaintiff's personal life style was adversely affecting his 

ability to adequately discharge his professional duties. Specifically the Board felt that because plaintiff was engaged in counseling 

people with personal problems, his own personal philosophies became 

relevant to his job performance. Since those personal philosophies conflicted with what the Board saw as the goals of the Mental 

Health Board, it utilized its authority as overseer of employee 
performance to recommend plaintiff's dismissal. 

That when an employee's conduct affects his ability to 

adequately perform his duties he can be discharged is well 

established. In Bruns v. Pomerleau, 319 F.Supp. 58, 67, it is 

stated: 

"ik * J~IiThat he does in his private life, as with 

other public employees, should not be his employer's 

concern unless it can be shown to affect in some 

degree his efficiency in the performance of his 

duties. ;k ;? ;k" (Emphasis supplied.) 

See also: Pickering v. Board of Education, 391 U.S. 563, 88 S. 

Ct. 1731, 20 L ed 2d 811; Battle v. Mulholland, 439 F.2d 321; 

Pred v. Board of Public Instruction, 415 F.2d 851. 

Accordingly, the judgment of the district court is 

affirmed . 

Justice 

A7e Concur: I